Philippine economic growth slowed sharply to 5.2 percent in the third quarter, from the revised 6.4 percent in the previous quarter and 6 percent last year, as typhoons took their toll on agricultural output and infrastructure development.
This was the most tepid expansion in more than a year or since the 4.3-percent growth in the country’s gross domestic product (GDP) in the second quarter of 2023, according to data from the Philippine Statistics Authority (PSA).
The third quarter performance brought the average GDP growth for the first three quarters to 5.8 percent, short of the government’s 2024 target of 6 to 7 percent.
But despite the below-consensus GDP growth for the third quarter, National Economic and Development Authority Secretary Arsenio Balisacan remained optimistic that the full-year GDP growth target would be met.
“We anticipate increases in holiday spending, more stable commodity prices, even low inflation, lower interest rates and a robust labor market,” Balisacan said.
Balisacan also stressed that the Philippines remained one of the fastest-growing economies in Asia.
“We follow Vietnam, which posted a 7.4-percent growth rate and are ahead of Indonesia with 4.9 percent, China [with] 4.6 percent and Singapore [with] 4.1 percent,” Balisacan said during a press briefing.
Balisacan attributed the slower growth to the adverse impact of the El Niño weather pattern during planting season, as well as the destruction caused by seven typhoons and the habagat (southwest monsoon) during the harvest season, which strained the agriculture sector.
The total agricultural damage and losses from the typhoons in the third quarter amounted to P15.8 billion, while damage to infrastructure, homes and other assets was estimated at P9.6 billion.
Consumption
In terms of demand, household consumption increased by 5.1 percent, the same growth as last year but faster than the 4.7-percent growth in the second quarter.
Balisacan said that the growth in consumption was supported by slower consumer prices.
Meanwhile, state spending fell by 5 percent, a sharp decline from the double-digit growth of 11.9 percent in the previous quarter and 6.7 percent a year ago, also due to weather disruptions.
On the other hand, the country’s gross capital formation, the investment component of the economy, grew by 13.1 percent during the quarter, better than the 11.6-percent growth in the April-to-June period and a turnaround from the 0.3-percent decline last year.
In a separate statement, Finance Secretary Ralph Recto said the Department of Finance would “intensify whole-of-government efforts, including intensive monitoring and mitigation of price increases on food and nonfood items, to keep inflation within the target range,” thus boosting consumption.
Meanwhile, the Makati Business Club (MBC) emphasized the importance of using farming methods that can withstand climate disruption and help ensure a stable food supply.
“MBC advocates for partnerships between the government and private entities that are vital to improve rural infrastructure, such as cold storage, logistics and transportation networks, which reduce postharvest losses and improve access to markets,” MBC said in a report.